Chinese Solar Panels may Face Higher Tariffs in US

The dispute between China and the United State over imports of solar panels is set to make life more challenging for Chinese companies.

That's after the US Department of Commerce said it saw "massive imports" from China in late 2011, a fact that will affect its final decision on tariffs.

The department said Chinese solar cell manufacturers exported "a massive" number of products to the US between October and December, with a growth rate above 15 percent compared with the period between July and September.

According to US law, Chinese companies will be required to pay punative tariffs if they are adjudged to have been dumping products ahead of the Commerce Department's first preliminary determination on duties, now scheduled for March 2.

If the agency imposes preliminary countervailing duties, the levies will apply retroactively to all Chinese imports of cells and modules into the United States from Dec 3, 2011.

"If the tariffs are determined on March 2 with a 90-day retroactivity, it will have a big impact on Chinese solar cell companies," said Wei Qidong, the former secretary-general of the Photovoltaic Industry Alliance in Jiangsu province. "However, the companies might have a chance to rectify the situation before the final decision is made."

"The 90-day retroactivity is not good news for the Chinese companies," said a senior official from China's Ministry of Commerce, who declined to be named.

He said once the US government announces the findings of a preliminary ruling scheduled for early March, the Chinese firms involved in the case will have to pay higher tarrifs.

The biggest lesson the Chinese companies should learn from the case is to adjust their export planning and scale to ensure they don't bring more disadvantages on themselves, said Li Lei, a lawyer working on behalf of Chinese solar cell enterprises appealing the US investigation with the law firm Sidley Austin LLP.

However, he said the Chinese companies will be asked to pay a security deposit when the preliminary ruling is made. They will not have to pay the 90-day tariffs immediately.

"Plus, the International Trade Commission (ITC) may not support the imposition of the tariffs," Li said.

In October, the US unit of Germany's SolarWorld AG and six other companies alleged that Chinese solar panel suppliers received unfair government subsidies and were selling their products in the US at prices below the cost of production, which was harmful to the interests of US manufacturers.

The US Commerce Department and the ITC officially began the investigation in November, which started a trade dispute in the new-energy sector between the two countries.

The Office of the US Trade Representative has filed five World Trade Organization cases against China since President Barack Obama took office in January 2009, compared with seven cases during the two terms of former President George W. Bush.